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Question
It is technique which involves regrouping of data by application of arithmetical relationships. " Identify the technique highlighted in the above statement and state its any two objectives.
Solution
The technique highlighted in the above statement is "Ratio Analysis".
The objectives of Ratio Analysis are:
- To simplify the accounting information.
- To analyse the profitability of a business.
- To assess the operating efficiency of a business.
- To determine short-term solvency (liquidity) and long-term solvency of a business.
Notes
Students can use any two points in their answer.
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